Retail Mix: How to Balance Your Product Range and Boost Sales?

There is up to a 70% chance that a loyal retail customer will make a repeat purchase. At the same time, the probability for a newly attracted customer is no higher than 20%. To make matters worse, the retail sector (for example, the grocery sector) operates on a slim margin of just 1.97%. This indicator does not allow for inefficient work: stable demand has to be maintained in order to make a profit. 

So, what does success depend on? The secret is precise retail mix management. Let's take a closer look at what such management is and how it can help your business.

It is a retail setting that retailers can manage to meet the needs of customers and influence their purchasing decisions. The classic concept of retail marketing mix (product, price, place, and promotion) was proposed in 1960 by American marketing professor E. Jerome McCarthy. It was supplemented in 1981 by Booms and Bittner. There are four elements to the retailing mix, also known as the “4Ps” in marketing strategies.

What do you offer to your target audience? It must meet their needs. Balance in the product range is important: popular as well as unique items. An excess or shortage of certain goods reduces the efficiency of the entire system.

Profitable for you, affordable for the buyer. The three pillars of pricing strategy: cost, competition, and audience purchasing power. A higher retail price is associated with quality, while a lower price attracts people who want to save money.

The product should be easy to find and convenient to buy. The location of the store is important, as is the store design and organization of the interior space. The customer should not have to spend time searching—everything should be at their fingertips.

The ways of attracting attention to the product: discounts, advertising, and sales promotions. The main goal is to retain regular customers and attract new ones. Promotion should be regular and strategically planned, not chaotic.

Later, the marketing mix was supplemented with three more “Ps”:

• People—the staff who interact with buyers directly or indirectly. The final business result often depends on the quality of their work.
• Process—the steps and procedures involved in providing the product to the potential customers, from logistics to inventory management.
• Physical Evidence—everything related to the tangible characteristics of the product: store layout, design, packaging, branding, window dressing, lighting and cleanliness, employee clothing, etc.

It seems simple and obvious. Just set up processes in physical retail stores according to the 4Ps or 7Ps and implement a marketing plan, right? Unfortunately, retailers also have to run an obstacle course of unprecedented challenges along the way.

The modern buyer expects more from a retailer than just a range of products. The aspects of an emotional connection, a personalized experience, and seamless interaction are no less important. Customer surveys show that 80% are more likely to make a purchase when brands offer omni channel opportunities. Shoppers can start their search on their smartphone and complete their purchase at a physical location.

Additionally, the huge amount of data on the target market, consumer behavior, and sales without quality processing often overloads the analytics department and fails to produce results.

How to deal with these challenges? Trends that are likely to shape the future of retail play a key role: the right product range, positive customer experience, and branding efforts.

It is the product assortment that directly determines key business indicators. If you balance your assortment and supplement it with high-margin traffic drivers, you will increase your overall profit. Make the wrong choice, and you will freeze funds in lost sales or illiquid inventory. Process automation saves the day: an AI-based system researches the market and internal processes and generates proposals for the assortment and inventory levels.

If customer expectations are met (people find what they are looking for and even see things in the assortment that they hadn't thought of), loyalty increases. To enhance the effect, it is worth using personalized offers based on purchase history.

They choose a brand that meets their expectations, life goals, and values. The brand is important to the target audience, and the product range in the store is the physical embodiment of the store's brand. It is the consumer goods that tell shoppers who you really are. How do you achieve this?

It depends on positioning. For example, if you run a retail business in the niche of healthy farm products, make the information about your suppliers as transparent as possible for customer satisfaction.

To form an effective retail mix and manage it in line with challenges, you need to use powerful technological tools. The LEAFIO AI platform can offer these. Its AI-based tools can automate and optimize basic processes, with a focus on product assortment.

Create the optimal product mix based on sales data, retail industry trends, and customer preferences. Use the key features of LEAFIO AI's Assortment Planning software:

• Data-driven product selection. The system analyzes the effectiveness of each product item and provides recommendations on whether to include or exclude it from the assortment, based on real data rather than intuition.
• Balanced category management for higher margins to achieve maximum gross margin.
• Automatic clustering of stores by various parameters: create unique product matrices that meet the specific demand of each retail outlet.
• Real-time performance tracking and quick adjustments for continuous improvement.

Stop guessing and act on real data—this is a focused position that helps attract customers more effectively.

You can build your product range based on real data on demand, on how you are selling products, trends, and buyer behavior, using powerful AI-based tools. They analyze large amounts of data and provide informed recommendations for increasing efficiency and reducing risks.

You can balance your product matrix with automated category management. Modern intelligent systems are capable of generating suggestions for category development.

Localized assortments are one of the keys to success. They can be formed by clustering stores based on customer behavior data.

It is best to track data in real time in order to respond to changes in demand in a timely manner, avoid losses, and update the assortment as quickly as possible.